The 4th Element of the Management System | Operational Excellence Quick Hits

Speaker 2: (00:05)
In this session, we’re going to talk about the last element of the management system, the necessary and sufficient conditions that need to be in place to achieve and sustain operational excellence. The last element of the management system is sustainability. So in our definition, improvement isn’t an improvement unless it’s sustainable. So sustainability is an important part of operational excellence. As the company makes improvements, then they need to be able to sustain those improvements and build on those improvements going forward. Some of the keys of sustainability first having the right metrics. So you’ve got to have the right performance metrics in order to create the behaviors necessary to sustain operational excellence. Also, you need to have buy-in from the organization. If you don’t have buy-in, it’s not going to be sustainable. So the buy-in process, we agree that there is a problem.

Speaker 2: (01:05)
First, if people don’t agree that there’s a problem, then they don’t understand the need for change. Second, we agree on the problems. Once you agree that there is a problem, then you need agreement on what is the problem. Third, we agree on the direction of the solution. So if we get everyone in alignment on the direction of the solution, then we’re on our way to the buy-in process. Fourth, we agree on the details of the solution. So once we agree on the direction, then how is it going to be implemented within the organization? Fifth, we agree on the negative ramifications can be resolved. So if there is any negative consequences of the solution, you need to make sure that those negative consequences are resolved before you implement the solution. This is a really key element of the sustainability. Six, we agree on the details of the implementation and how it’s actually going to work. And seven, we agree that there’s any risks that those can be mitigated.

Speaker 2: (02:04)
Also with the measurement, the purpose of measurement is to provide judgment on the current state of the organization and induce people in the organization to take action that’s aligned with the goal for the organization. Next is provide immediate feedback on the effectiveness of the decision-making process. So if we don’t have that immediate feedback and people make the wrong decisions, then it could be a long time before we correct the incorrect decision. Dr. Goldratt said, “Tell me how you measure me, and I’ll tell you how I behave.” So people behave in a way that they’re measured. You got to have the right measurement systems in place.

Speaker 2: (02:42)
The last, the third element of sustainability is building accountability into the process. So we look at the management window. The management window’s a time between what action is taken until that time that management understands the effect, either positive or negative of the action taken. The goal is to reduce that management window, so reduce the time between when the actions taken until the effects of those actions are known. So if we look at any system and we have an output here, and time is going from when the input to the process starts, until we get complete output of the system, then we have the management window.

Speaker 2: (03:21)
If it takes a long time to understand the effect of that decision in the first process, it could be too late to correct it and it’s going to be costly to correct it. What we want to do a shorten that management window so when we have a process, we get immediate feedback on that process, and if there is a problem, we take immediate corrective action. Just doing this will reduce the amount of negative effects seen, the amount of quality issues, the amount of re-work, and it will help with the sustainability of the process improvements. So therefore, the key elements to sustainability, one, having buy-in from the employees. Two, having the right measurement system to induce the right behaviors. And three, building accountability into the process so that the process improvement are sustainable over the term.